Strategic offers speeding up
Revenues of € 216.2 million
Operating margin increase of 60 basis
points
Reinforced position on the Cloud thanks to
the acquisition of two European Leaders in Google Enterprise
Solutions
Regulatory News:
Devoteam (Paris:DVT):
In million of euros (1) 30.06.2014
30.06.2013 Growth
OrganicGrowth (2)
Organic
Growth (2)
excludingBetween
(3)
Consolidated revenue 216.2 237.3
-8.9% -0.3% -1.5% Of
which France 90.5 106.6 -15.1% -1.0%
-1.0% Of which International 125.7 130.7
-3.8% 1.4% -2.0%
Operating margin (4)
7.1 6.3 +12% In %
of the Revenues 3.3% 2.7% +0.6 pts
Operating income 6.0 10.5
-43% In % of the Revenues 2.8% 4.4%
-1.6 pts
Net income – Group share 2.6
7.3 -64% Diluted earnings per share (5)
0.35 € 0.78 € -0.43 €
Cash available at H1 closing
(6) 9.7 13.8 -4.1 M€
(1) The financial statements presented in this press release
have been approved by the Supervisory Board on August 28th 2014 and
are currently being certified by the Group Auditors.(2) At
comparable exchange rates and perimeter.(3) “Between”, a subsidiary
operating in the Netherlands on the market of sourcing of IT
professionals, has a very volatile contribution to revenue since,
depending on the terms and conditions of the contract they sign
with their subcontractors and their client, revenue consolidated at
group level may be based on the contract’s gross margin or on the
full amount invoiced to the final customer. As a consequence, the
group decided to isolate this subsidiary when calculating the
growth rate of consolidated revenues.(4) Defined as operating
result before amortization of intangible assets related to
acquisitions and excluding the impact of stock-options.(5) Based on
the weighted average number of shares for the year.(6) The cash
available at the end of the year is defined as the cash and cash
equivalent plus other liquid financial assets minus bank overdrafts
and short-term credit lines.
The simplified consolidated accounts as of June
30th 2014 are available on our website: http://www.devoteam.com
Devoteam (NYSE Euronext Paris: DVT) announced revenues of €
216.2 million, slightly increasing at constant exchange rates and
perimeter versus the 2013 first semester, and an operating margin
of € 7.1 million for the first half of 2014. Compared to the first
half of 2013, the operating margin has increased by 60 basis
points.
The net income attributable to the shareholders of Devoteam S.A.
amounted to € 2.6 million, versus € 7.3 million one year earlier
(which included significant capital gains from the divestment of
assets). Net income significantly improved compared to the first
half of 2013, excluding profits on divested assets.
After a year of deep transformation in 2013, the figures for the
first half of 2014 were in line with the group’s growth and
profitability objectives.
Acquisitions
2014 therefore allowed an acceleration of the investments to
support the strategic offers, with the ambition of positioning
Devoteam as a European leader on Cloud services.
In July 2014, Devoteam acquired 70% of the share capital of
gPartner, which operates as the main Google Enterprise partner in
Europe (Global EMEA Google Enterprise Partner of the Year
2013, 2012 and 2011). gPartner delivers the full suite of Google
Enterprise solutions to more than 700 customers: collaborative
tools, mobility solutions, search engine, infrastructure and cloud
applications.
The group also acquired a stake in Progis, a geographic
information systems specialist (EMEA Google Maps Partner of the
Year 2013). Using Google Maps, Progis integrates mapping with its
clients’ business processes.
Lastly, Devoteam increased its stake in Axance, a specialist in
the design of mobile services. Devoteam S.A. now owns 54.1% of the
capital of Axance.
Sébastien Marotte, Vice-President of Google Enterprise
International (EMEA & Asia Pacific) commented: “We welcome the
merger of our best European partners. We see a great opportunity
for our customers who will benefit from Devoteam Cloud Services’
expertise in the transformation of their IT. The creation of such
an actor confirms the importance of Google Enterprise products on
the European market.”
gPartner and Axance generate a total of about € 15 million per
year of revenues, with a light earnings enhancing effect on the
group operating margin. Axance (until now consolidated using the
equity method) and gPartner have been fully consolidated since July
1st 2014. Progis is to be consolidated using the equity method as
of September 2014. The purchase prices were not disclosed.
Results for the First Half of 2014
The consolidated revenue for the first half of 2014
amounted to € 216.2 million. The revenue recognition principle used
for the broker business in the Netherlands (Between) is stable
compared to 2013, which differs from the assumption taken when the
group published its Q1 2014 revenues. Pro-forma information is
presented in the Appendix of this press release.
During the second quarter of 2014, the Group reported revenues
of € 107.2 million, a 2.5% decrease excluding exchange rate and
perimeter effects, and excluding Between. The variation was notably
explained by a negative effect of the number of working days.
Adjusted for the working days effect, the growth rate for the
second quarter is almost stable compared to the growth rate of the
first quarter of this year.
The operating margin – defined as the operating result
before amortization of intangible assets related to acquisitions
and excluding the impact of stock options – significantly increased
thanks to the improvement of the utilization rate. It reached € 7.1
million for the first half year of 2014, or 3.3% of the
revenues.
The operating income stood at € 6.0 million against €
10.5 million a year earlier. It included € 0.4 million profits from
disposals of subsidiaries versus € 12 million a year earlier.
Non-current expenses significantly decreased to € 1.3 million for
the first six months of 2014, against € 6.2 million for the first
half of 2013. They are mainly composed of restructuring costs for
France and Spain. For the semester, no goodwill impairment loss was
recorded (against € 1.4 million in 2013 in Germany and Poland).
The financial result slightly improved to € -0.6 million
(vs. € -1.1 million for the first half of 2013) mainly thanks to a
favorable impact of exchange rates.
Tax expenses amounted to € 2.5 million, stable versus the
first half of 2013. They represent 47% of earnings before taxes
(versus 25% a year earlier). The high tax rate is explained by the
effect of some local taxes (CVAE in France and IRAP in Italy) for €
1.3 million (versus € 1.5 million as of June 30th 2013) and the
impact of the corporate tax on subsidiaries making profits.
The net income reached € 2.9 million (against € 7.1
million a year earlier), of which € 0.2 million attributable to the
minority shareholders of the controlled companies and € 2.6 million
attributable to the shareholders of Devoteam S.A. The diluted
earnings per share amounted to € 0.35 (vs. € 0.78 as of June 30th
2013).
Available cash (including capitalization contracts
appearing in other current financial assets and adjusted for the €
12.9 million of bank overdrafts and short term credit lines)
reduced by € 33.2 million over the first six months of 2014 and to
reach € 9.7 million. Main variances include:
- A cash flow from operating
activities of € -11.3 million, resulting from the seasonal
increase of the working capital during the first part of the
year.
- A € 2.4 million positive cash flow
from investing activities, mainly explained by the divestment
of Devoteam AuSystems Italy.
- A € -20.7 million cash flow from
financing activities, including the payment (€ 19.8 million) of
the shares bought back within the framework of the public offer
closed by Devoteam S.A. on its own shares in January 2014.
The detail of the net financial debt is presented in the
appendices of this press release.
Analysis by region
The region “New Mediterranean” includes, under a unique
managerial line, the “professional services” activities in France
(Devoteam Expertise, Devoteam Consulting and Devoteam Solutions),
as well as the North African business units. The region improved
its operating margin by 170 basis points during the first half year
of 2014, driven by the good trend of the Consulting activity in
France and the rationalization effort that started at the end of
2013 on integration activities. However, this effort has had a
negative impact on the revenue growth.
The region “Northern Europe” (United Kingdom and
Scandinavia) strongly improved its operating margin during the
first half of 2014 compared to the same period last year. This
improvement was mainly due to a good commercial dynamic in the
United Kingdom and around the ServiceNow solutions. On the
opposite, a tense labor market in the Consulting sector in Norway
and Denmark, and a negative impact in terms of number of billable
days during the second quarter of 2014, drove the utilization rate
up but penalized the growth.
The region “Central Europe” gathers operations in
Germany, Switzerland, Austria, Poland and Czech Republic. The
improvement of the profitability observed during the first half
year followed the commercial successes of the end of last year in
Germany and Czech Republic. The offer “Network Transformation”
allowed to regain market shares with the group’s main Telecom
customers in Germany whereas the offer “private Cloud” has seen a
successful development, particularly in the automotive industry.
These improvements in Germany enabled to counterbalance a
persistently difficult situation in Poland and an unfavorable day
effect during the second quarter.
The revenue and operating margin of the “Single entities”
(Spain, the Netherlands, and now the activities in Belux) for the
first half of 2014 were impacted by a tense public market in the
Netherlands and a downward pressure on the Telecom activities in
Spain. On the contrary, the Belgian subsidiary, which took over a
R&D center of NSN a few years ago, has successfully diversified
its activity thanks to the development of the Cloud and IT Service
Excellence offers, especially in the utilities sector.
With revenues of € 4.9 million for the second quarter of 2014,
the region “Middle East & Turkey” grew 9.9% at constant
perimeter and exchange rates. As announced at the end of 2013, the
region came back to growth in the first half of 2014, enabling a
significant improvement of the operating margin.
The region “Others” combines all the other investments of
the Group (“Venture and New business models”) as well as non
reallocated corporate expenses.
All divested activities are gathered in the “Divestments”
reporting line.
Headcount and utilization rate
As of June 2014, Devoteam employed a workforce of 3.545 people
compared to 3.900 at the end of 2013. This decrease is mainly
explained by the effect of the divestments in subsidiaries (262
employees). For the remaining perimeter, this decrease has enabled
the Group to improve its utilization rate.
Utilization rate of internal resources, excluding
divestments* Q1 2013 Q2 2013 Q3
2013 Q4 2013 FY 2013 Q1
2014 Q2 2014 79.6% 81.8% 82.3%
84.2% 81.9% 82.7% 83.9%
* In 2014, Divestments includes the subsidiary AuSystems Italy.
In 2013, it also included the T&M activity sold to Ericsson and
Teligent Russia
As of 30th June 2014, the ratio of billable headcount to total
staff stood at 85.0 %, a slight decrease in comparison with the
situation at the end of last year.
In the first half year of 2014, the group showed an improvement
in its utilization rate of internal resources1 excluding
divestment, at 83.3% compared to 80.6% in the same period in
2013.
2014 Outlook
Taking into account a first half of the year in line with the
objectives, the integration of two new entities in the
consolidation perimeter, and a stable revenue recognition
methodology between 2013 and 2014 for Between, the group has
increased its 2014 revenue target. Revenues for 2014 should be over
€ 425 million. The positive effect on the percentage of operating
margin of the newly consolidated companies should not fully
compensate the dilutive effect of the extra revenues to be
recognized on Between. The 2014 operating margin should be close to
4.5% of the revenue.
Dividend
On January 21st 2014, the Executive Board cancelled the shares
bought back through the public offer closed on January 21st 2014.
Consequently, the share capital amounted to € 1,237,391.93 divided
into 8 161 587 shares.
As of June 30th 2014, taking into account the above operation
and the exercise of options during the period, the share capital of
Devoteam S.A. amounted to € 1,238,317 divided into 8,167,757
shares. As of June 30th 2014, Devoteam S.A. owned 663.584 of its
own shares, representing 8.12% of the total number of shares.
During the Shareholders’ meeting, the Executive Board proposed a
dividend amounting to 25 cents per share for the fiscal year 2013.
Dividend payment was realized on July 2nd 2014.
Financial calendar and press releases
Press release after market
closed
Q3 2014 Revenue Q4 Revenue and FY 2014 results
November 6th 2014 March 2nd 2015
Appendix
Activity evolution by region – Revenues by
quarter
In million of euros Q1 2014 Q1
2013 Q2 2014 Q2 2013 H1
2014 H1 2013 France 45.4
60.7 45.1 45.9
90.5 106.6 Growth rate -25.2%
-1.7% -15.1% L-f-l
growth(1) -1.1% -0.9%
-1.0%
International 63.6
64.6 62.0 66.1
125.7 130.7 Growth rate -1.5%
-6.1% -3.8% L-f-l
growth(1) 2.2% 0.6% 1.4%
L-f-l growth excluding Between -0.4%
-3.7% -2.0%
Total
109.0 125.3 107.2
112.0 216.2 237.3 Growth rate
-13.0% -4.3% -8.9%
L-f-l growth(1) 0.6% -0.0%
0.3% L-f-l growth excluding Between
-0.7% -2.5% -1.5%
(1) At constant perimeter and exchange rates
In million of euros Q1 2014 Q1
2013 Q2 2014 Q2 2013 H1
2014 H1 2013 New Mediterranean 37.6
38.0 37.3 38.3 74.9 76.4 Growth rate
-1.0% -2.8% -2.0%
L-f-l growth(1) -1.0% -2.8%
-1.9%
Northern Europe 14.6
15.6 13.8 15.7 28.4 31.2 Growth
rate -6.3% -12.1% -9.2%
L-f-l growth(1) -3.0% -10.8%
-6.9%
Central Europe 11.7
11.6 11.8 11.9 23.5 23.5 Growth
rate 0.9% -0.9% -0.0%
L-f-l growth(1) 1.1% -0.9%
0.1%
Middle East &
Turkey 4.9 4.5 4.9 4.9 9.8
9.4 Growth rate 9.4% 1.4%
5.2% L-f-l growth(1) 18.3% 9.9%
14.0%
Single entities
14.2 15.5 14.5 15.6 28.7 31.1
Growth rate -8.5% -7.1%
-7.8% L-f-l growth(1) -8.5%
-7.1% -7.8%
Others 21.9
20.1 23.7 20.6 45.6 40.7 Growth
rate 9.2% 15.2% 12.2%
L-f-l growth(1) 11.3% 16.7%
14.0% L-f-l growth excluding
Between 4.4% 5.6% 5.0%
Divestments(2) 4.0 20.0
1.2 5.0 5.2 25.0 Growth rate -79.8%
-76.3% -79.1%
L-f-l growth(1) -1.5% 0.6%
-1.1%
Total 109.0 125.3
107.2 112.0 216.2 237.3 Growth rate -13.0%
-4.3% -8.9%
L-f-l growth(1) 0.6% -0.0%
0.3% L-f-l growth excluding Between -0.7%
-2.5% -1.5%
(1) At constant perimeter and exchange rates(2) For H1 2014, the
region Divestments included the subsidiary AuSystems Italy. For H1
2013, it also included T&M and Teligent Russia.
Activity evolution by region – H1 Revenues and Operating
margin
In million of euros
Groupcontribution H1
2014
OperatingmarginH1
2014
In % of
GroupcontributionH1 2014
Groupcontribution H1
2013
OperatingmarginH1
2013
In % of
GroupcontributionH1 2013
France 90.5 3.9 4.3%
106.6 5.3 5.0% Growth
rate -15.1% -25.6%
L-f-l growth(1) -1.0%
International
125.7 3.1 2.5%
130.7 1.0 0.8% Growth rate -3.8%
210.3%
L-f-l growth(1) 1.4%
L-f-l growth excluding Between
-2.0%
Total 216.2 7.1
3.3% 237.3 6.3
2.7% Growth rate -8.9% 12.3%
L-f-l growth(1) 0.3%
L-f-l growth excluding Between -1.5%
(1) At constant perimeter and exchange rates
In million of euros
Groupcontribution H1
2014
OperatingmarginH1
2014
In % of
GroupcontributionH1 2014
Groupcontribution H1
2013
OperatingmarginH1
2013
In % of
GroupcontributionH1 2013
New Mediterranean 74.9 4.1
5.5% 76.4 2.9 3.8%
Growth rate -2.0% 41.6%
L-f-l growth(1) -1.9%
Northern
Europe 28.4 0.7 2.6%
31.2 0.1 0.4% Growth rate -9.2%
445.6%
L-f-l growth(1) -6.9%
Central Europe
23.5 (0.0) -0.1%
23.5 (1.3) -5.7% Growth rate
-0.0% -97.6%
L-f-l growth(1) 0.1%
Middle East &
Turkey 9.8 0.7 6.9%
9.4 0.4 4.3% Growth rate 5.2%
68.4%
L-f-l growth(1) 14.0%
Single entities
28.7 0.5 1.6% 31.1
0.8 2.7% Growth rate -7.8%
-46.3%
L-f-l growth(1) -7.8%
Others 45.6
1.2 2.6% 40.7 2.7
6.6% Growth rate 12.2% -55.9%
L-f-l growth(1) 14.0%
L-f-l growth excluding Between 5.0%
Divestments(2) 5.2 (0.0)
-0.6% 25.0 0.7
2.8% Growth rate -79.1% -104.4%
L-f-l growth(1) -1.1%
Total 216.2 7.1 3.3%
237.3 6.3 2.7% Growth
rate -8.9% 12.3%
L-f-l growth(1) 0.3%
L-f-l growth excluding
Between -1.5%
(1) At constant perimeter and exchange rates(2) For H1 2014, the
region Divestments included the subsidiary AuSystems Italy. For H1
2013, it also included T&M and Teligent Russia.
Net debt
In million of euros 30.06.2014
31.12.2013 30.06.2013
Financial investments (included in “Other
current financial assets” in balancesheet)
0.3 0.3 0.3 Cash and cash equivalents *
22.3 77.2** 29.9
Bank overdrafts and credit Revolving
(included in current “Loans, borrowingsand bank overdraft” in
balance sheet)
(12.9) (34.7) (16.3)
Cash Balance
9.7 42.9 13.8
Current financial debts (excluding bank
overdrafts, which are alreadyincluded above)
(2.8) (2.2) (2.3) Non-current financial debts
(4.1) (4.3) (4.9)
Cash net of financial
debt 2.9 36.4 6.6
Total consolidated equity 108.0
126.5 131.8 Net debt-to-equity ratio
-2.7% -28.8% -5.0%
* Including a positive impact from factoring contract of €
12.1million as of June 30th 2014 (vs. € 13.5 million as of Dec.
31st 2013)** FY 2013: including € 26.1 million for pledging of the
tender offer. € 20.2 million were finally cashed out in January
2014
Pro forma information on revenue
In million of euros H1 2013
pro-forma*
H1 2013
published**
New Mediterranean 76.4 91.2 Single entities
31.1 15.3 Others 40.7 41.7
* Reclassification of Devoteam Belgium and Devoteam Luxembourg
from "New Mediterranean" region to " Single Entities " region &
of Devoteam Morocco from "Others" region to "New Mediterranean"
region** In the FY 2013 results press release
In million of euros Q1 2014 pro-forma*
Q1 2014 published** Consolidated revenues
109.0 104.1 Of which France 45.4
45.4
Of which International 63.6
58.7 In million of euros Q1 2014
pro-forma* Q1 2014 published** New Mediterranean
37.6 37.6 Northern Europe 14.6 14.6
Central Europe 11.7 11.7 Middle East & Turkey
4.9 4.9 Single entities 14.2 14.2
Others 21.9 17.0 Divestments
4.1 4.1
Consolidated revenues
109,0 104.1
* Following an extensive analysis, during the second quarter of
2014, of the new terms and conditions applied by Between in the
Netherlands, the Group reached the conclusion that the revenue
recognition method for this subsidiary was not to be modified
in comparison to last year. Therefore, consolidated revenue
for Q1 2014 increased by €4.9 million compared to the figure
initially published in the Q1 2014 revenue press release** In
the Q1 2014 revenue press release
Pro forma information on operating margin
In million of euros H1 2013
pro-forma*
H1 2013
published**
New Mediterranean 2.9 3.1 Single entities 0.8
0.6 Others 2.7 2.7
* Reclassification of Devoteam Belgium and Devoteam Luxembourg
from "New Mediterranean" region to "Single Entities" region &
of Devoteam Morocco from "Others" region to "New Mediterranean"
region** In the FY 2013 results press release
About Devoteam
Devoteam (ISIN: FR 0000073793. Reuters: DVTM.PA. Bloomberg: DEVO
FP) is an IT consulting group created in 1995. Combining consulting
know-how and technical expertise enables Devoteam to provide its
customers with independent advice delivering innovative and
industrialized end-to-end solutions.
In 2013, Devoteam achieved revenues of € 453 million and an
operating margin of 3.7%. The Group has a workforce of 3 600
employees in 21 countries across Europe North Africa and Middle
East.
ISIN : FR 0000073793, Reuters : DVTM.PA, Bloomberg : DEVO FP
http://www.devoteam.com
1 Utilization rate measures the percentage of working hours
(excluding paid holidays) of billable employees that were billed to
a client
DevoteamExecutive Board:Stanislas de Bentzmann,
Co-CEOstanislas.de.bentzmann@devoteam.comorFinancial communication
:Evelyne Broisievelyne.broisin@devoteam.comLaurent
Lecerflaurent.lecerf@devoteam.comorPress:Aurélie
Chambonaurelie.chambon@ketchum.frBastien Rousseaubastien.rousseau@ketchum.fr